Facebook Inc’s record initial public offering (IPO) is already oversubscribed, a source familiar with the share listing said, days after the world’s largest social network embarked on a cross-country roadshow to drum up investors’ enthusiasm.
Despite concerns about slowing growth, a lofty valuation and signs the company is having trouble ramping up revenue from mobile advertising, institutional investors have so far indicated demand for more shares than Facebook has available, the source said.
Analysts say the company, which is seeking to raise about US$10.6 billion by selling more than 337 million shares at US$28 to US$35 apiece, may raise that price range if demand turns out to be healthy enough.
One large institutional investor had put in a major order for shares on Wednesday and was calling around syndicate desks trying to acquire more, a second source familiar with the IPO’s progress said, declining to be identified because the details are not public.
Facebook declined to comment.
Separately, the US Federal Trade Commission (FTC) has reached out to Google Inc and Twitter in an investigation into Facebook’s US$1 billion acquisition of photo-sharing service Instagram, a source familiar with the probe said.
It was not immediately clear what specific information the FTC was looking for, the source said. The Commission automatically initiates a review of any acquisition of significant size.
The acquisition of the top photo-sharing service on the Internet is a crucial part of Facebook’s strategy to bolster its mobile offerings, at a time when consumers are increasingly accessing the Internet through smartphones.
Facebook had said it hopes to complete the deal — the largest in the company’s history — in the second quarter, but some observers think that may be an ambitious target, given the size of the deal and Facebook’s status as the world’s No.1 Internet social network.
The company is expected to begin trading on May 18 after an IPO that dwarfs the coming-out parties of other tech powerhouses.
With 900 million users, it is challenging established Web businesses such as Google and Yahoo for consumers’ online time and advertising dollars, but longer term, analysts say Facebook needs to develop a way to earn money from the increasing number of users who access the social network on mobile devices, such as smartphones.
Facebook, which makes most of its money from advertising, began offering limited ads on the mobile version of its service only recently.